Dividend Aristocrats: The Best of the Best for Stable Income

Stocks with a strong record of growing dividends are often solid investments to generate significant income over time. One group of stocks that stands out in this regard is the Dividend Aristocrats.

Dividend Aristocrats (NOBL) are companies listed in the S&P 500 Index ($SPX) that have consistently increased their dividends every year for at least 25 years. These companies are known for their commitment to rewarding their shareholders with higher dividends, making them ideal for those looking for consistent income.

Investing in Dividend Aristocrats not only provides a steady income stream, but also allows investors to participate in the financial health and resilience of these companies. Their ability to maintain and increase dividends over decades indicates strong earnings and a solid business foundation, which lowers investment risk. Moreover, their long-term track record of earnings and dividend growth often enables them to outperform broader market indices.

Among Dividend Aristocrats, Altria (MO), NextEra Energy (NEE), and Walmart (WMT) stocks are among the best of the best for generating stable income. Let’s take a closer look at why these stocks could continue growing their dividend payouts in the coming years.

#1. Altria (MO) 

Altria (MO) stands out for its long-standing dividend growth, and offers the highest yield among the Dividend Aristocrats. This makes it a compelling choice for income-focused investors looking for substantial returns.

Recently, Altria increased its quarterly dividend by 4.1%, marking the 59th time it has raised its dividend in the last 55 years. This demonstrates Altria’s strong ability to grow its earnings, while still maintaining a commitment to rewarding shareholders via increasing payouts.

With its leadership in the tobacco industry and its expansion into smoke-free products, Altria is positioned to continue delivering solid earnings growth in the coming years. The company’s management expects adjusted earnings per share (EPS) to grow at a mid-single-digit rate through 2028, which should support further dividend increases. Altria plans to raise its dividend in line with its earnings growth.

Overall, Altria offers reliable earnings growth and visibility over future dividend increases, making it an appealing investment for income-focused investors.

While analysts currently rate MO stock as a “Hold,” its approximately 8% yield and consistent payouts make it one of the best stocks to earn stable passive income.

#2. NextEra Energy (NEE) 

NextEra Energy (NEE) is positioned to grow its dividend at an accelerated rate. This makes it a compelling investment for investors seeking income and potential dividend growth.

NextEra Energy generates clean energy, and is a leader in battery storage. It also owns Florida Power & Light Company, America's largest electric utility.

NEE’s regulated and contracted assets generate most of its earnings, providing a solid base for dividend growth. The company’s long-term contracted renewable assets and storage investments, combined with growing regulated capital, add stability to its operations, drive earnings, and support dividend growth.

NextEra Energy expects a healthy adjusted earnings per share (EPS) growth of 6-8% through 2027. This will enable the company to increase its annual dividend by around 10% during the same period.

With a growing rate base and increasing demand for renewable energy, NextEra is well-equipped to navigate future challenges. Its diverse portfolio of long-term contracted assets provides further stability and visibility for future earnings and dividends.

Currently, NEE stock carries a “Moderate Buy” consensus rating, and offers a well-protected yield of 2.4%.

#3. Walmart (WMT) 

Retail giant Walmart (WMT) has a stellar history of consistently growing its earnings, regardless of market conditions. This stability enables Walmart to sustain its dividend growth, making it a dependable income stock.

Earlier this year, WMT raised its annual dividend by 9% to $2.49 per share, the largest increase in over a decade. This marked the 51st consecutive year of dividend growth, highlighting Walmart's commitment to returning value to its investors. Moreover, such a substantial increase shows management’s confidence in the company’s growth prospects and strong cash flow generating capabilities.

Walmart’s strategic initiatives, including a value pricing strategy, a wide product assortment, and robust omnichannel capabilities, drive consistent earnings growth. Moreover, Walmart’s investments in technology enhance customers' shopping experiences and support revenue growth.

Beyond its core retail operations, Walmart is diversifying its business model. The company has ventured into advertising and data monetization, opening up new revenue streams that are expected to fuel future growth. Additionally, Walmart's efforts to improve its supply chain and cost reduction measures position it well to grow its profitability.

Overall, Walmart is poised to deliver solid growth, outperform the broader markets with its returns, and enhance shareholders’ value through higher dividend payments. Analysts are optimistic about WMT’s prospects, as reflected in the “Strong Buy” consensus rating.

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